IEA: Russia’s oil output to hold steady despite sanctions

The Paris-based IEA forecast Russia’s daily oil output would hover between 10.77 million and 10.83 million barrels from 2025 to 2030.

Russia’s oil production is expected to remain largely stable over the next five years despite stringent international sanctions battering its energy industry, according to projections by the International Energy Agency.

In a closely-watched report, the Paris-based IEA forecast Russia’s daily oil output would hover between 10.77 million and 10.83 million barrels from 2025 to 2030. While down from the 11.09 million barrels pumped in 2022 before sanctions took full effect, the figures suggest Moscow has managed to adapt to the punitive measures imposed over its invasion of Ukraine.

The IEA attributed the resiliency to state oil giant Rosneft bringing major new production online at its Vostok Oil project in the Arctic. This is expected to offset declines at legacy fields in western Siberia as sanctions increasingly strain Russia’s upstream capabilities.

However, the agency cautioned that Russia’s longer-term production outlook remained highly uncertain due to the sanctions’ impacts on investment, technology imports, and recruiting foreign expertise.

Moscow has denied the sanctions are impacting its energy sector, insisting it can withstand efforts aimed at curtailing export revenues that fund its war effort in Ukraine. Russian officials have doubled down on partnerships with China, India, and other Asian economies continuing to purchase its oil.

Still, the projections indicate Russia’s output has taken a hit compared to pre-war levels projected before the invasion. The IEA had previously forecast Russia’s production to rise steadily to nearly 12 million barrels per day by 2030, driven by new projects in the Arctic and shale resources.

Western leaders have sought to limit Moscow’s energy profits while avoiding a global supply shock that could send prices soaring. However, Russia has proven adept at circumventing restrictions by utilizing a large fleet of shadowy tankers to mask exports.

The IEA acknowledged the role of Asian buyers in propping up Russian production for now but suggested that technological constraints and capital shortages could eventually hamper Moscow’s output and export capacity over the longer term.

As Russia digs its heels into the Ukraine war with no diplomatic resolution in sight, the report underscores the challenges the West faces in eroding the Kremlin’s energy clout – a critical economic driver of the invasion. The ability to sustain oil revenues provides Putin a financial lifeline to keep troops and equipment fielded.